Much has been written about the “problem” of the Nautilus. It causes problems for both collectors and for Patek Philippe themselves. There is a solution….
The problem for collectors
For collectors who own a Nautilus, the problem becomes one of having a highly valuable and increasingly recognisable watch on their wrist. Having an unobtrusive $25,000 watch on the wrist is one thing, but seeing that watch become worth closer to $100,000 and readily recognisable causes all sorts of problems for many collectors. For collectors who have yet to buy their Nautilus, the problem of waiting for (seemingly) years for delivery can be very frustrating.
When an unobtrusive watch becomes a recognisable $100k asset, it poses a problem for a collector
The Nautilus must not become another “Royal Oak”
For Patek Philippe, the problem is altogether different. Thierry Stern does not want Patek Philippe to become dominated by a single watch. Nor does he want steel to become too dominant as a material. Audemars Piguet have effectively become the “Royal Oak” company. Stern does not want to see Patek Philippe become the “Nautilus” company.
The Rolex template
Rolex actually provide a good template for success. The Submariner does not dominate the Rolex collection. Indeed, Rolex success spreads across the GMT, Daytona as well as other variants across the range where one can find numerous “hot” Rolex watches that are close-to-impossible to buy. This is a good template for Patek Philippe.
Within Rolex, there is a multitude of “hot” watches
The symbol of success
The comparison with Rolex is apt on another level too. I think it is fair to say that the Nautilus has become the new Rolex Submariner. For much of the last 30 years or so, the Rolex Submariner was seen as a watch worn by successful people. Rightly or wrongly, if someone wanted to reward themselves for a personal success, the Rolex Submariner was often a watch that came to be seen as that symbol of success. It became instantly recognisable as such. It still is. However, in this world of required differentiation, a new level of success symbolism was needed. Something that was instantly recognisable but of a more elite nature. Enter the Nautilus. It is a notch higher in that status symbolism.
A new breed of collector
Hence, a new breed of collector was born. This new collector typically owns a few relatively low value watches but sees the Nautilus as the pinnacle of a collection. It represents the jewel in the crown. Quite often it may be the only watch in the collection that is worn. More and more celebrities and sports stars see it as a must-have accessory. 10 years ago, professional soccer players started buying vintage Rolex daytonas. As more and more were seen with the Rolex “Paul Newman” on their wrist, more and more professional soccer players needed to participate. It represented an “asset” that can be visibly displayed. That appeals to many people. The Nautilus has taken on this mantle.
The Nautilus is a watch that visibly shows success
The new “de rigeur”
The watch that is now “de rigeur” amongst the professional soccer players is the Nautilus. And so it is across much of the celebrity world. It is the Nautilus that is becoming instantly recognisable as the symbol of success that more and more celebrity role models have on their wrist. Whereas the Rolex Submariner symbolises success, the Patek Philippe Nautilus symbolises “great” success. And that makes it highly desirable not only for the celebrity collector but also for the new breed of collector that need this overt jewel in the crown. Unlike the Rolex Submariner, the Nautilus has a chicness to it that adds to its desirability. The fact that it is very hard to acquire just adds more spice.
I wrote about the craze of the Nautilus quite recently and I attach a link at the end of this post. This craze has not been built on any restriction in supply of Nautilus. Planned production will almost certainly show some rise in output. However, demand has gone through the roof. And Patek Philippe have taken the decision to maintain its production plans rather than ramp up production to meet the new demand. The result is a very sharp spike in prices which, ironically, makes the Nautilus even more desirable to the new breed of collector who wants one. Nothing makes something more desirable than having it impossible to get.
Solving the Nautilus “problem”
So how can Patek Philippe “solve” this problem? Some have argued that eventually the bubble will burst and the problem will solve itself. That may happen. But I suspect it is unlikely anytime soon. Indeed, whilst demand and supply may create a new equilibrium, it may not help Thierry Stern in his desire to prevent Patek Philippe from evolving into a one-watch dominated company. The froth could go, but the Nautilus would still remain and it would still likely dominate the demand for Patek Philippe watches.
Perception is everything
And herein lies the rub. The problem for Patek Philippe is that when these new collectors decide to buy their first Patek Philippe watch, their mindset is on either the Nautilus or the Aquanaut….and in steel. That is the decision process. If they can’t get a steel Nautilus then they will look at a steel Aquanaut. If neither is available then……. then nothing. It is a binary situation. On various forums, it is now quite normal to see comments like… “I may be being shallow, but I only see Nautilus within Patek Philippe.”
Hot or not?
This is where Patek Philippe need to change things. Five years ago, there were several “hot” watches within the Patek Philippe range. The Ref. 5131 world time enamel was a watch that was extremely hard to get. It was an application piece that sold in the secondary market at a substantial premium to the retail price. In today’s world, the Ref. 5231 world time is no less beautiful but just does not have the same cache in this Nautilus-driven world.
When the 5131 was released it was a hot watch.
10 years ago, the Ref. 5070P chronograph was released and it became an instant hit commanding a substantial premium in the secondary market. Today’s chronograph offering from Patek Philippe, the Ref. 5172G, gets lost amidst the Nautilus craze and almost certainly does not trade at a premium.
At the upper end of the range, take the Ref. 5370P. Most aficionados believe this is one of the most beautiful watches made by Patek Philippe in the last 30 years. A split second chronograph in platinum with a black enamel dial. It sits, unappreciated, in the secondary market at a discount to the retail price. It is not really even seen through the Nautilus haze.
The secondary price of the Nautilus Ref. 5740G is identical to the 5370P. Something wrong here….
Put simply, there are not enough “hot” watches perceived in the Patek Philippe collection that will attract the attention of the new breed of buyer. And that needs to change. There needs to be more perceived “hot” watches that can lift some of the burden from the Nautilus.
I think it is important to make a key distinction. I am not saying for one second that there are not hot watches in the current collection. What I am saying is that the new breed of collector does not perceive anything other than the Nautilus (or Aquanaut) as hot. It is this perception that needs to be changed.
How would I alter this perception? Thierry Stern has stated that he does not want to raise production plans on steel watches or increase Nautilus or Aquanaut production beyond what is planned. Raising supply to meet demand is clearly not the strategy.
OK, then restrict supply
Somewhat perversely, restricting supply may be one answer. Cut planned production of a group of watches that are not Nautilus or Aquanaut. For example, make the 5231J virtually impossible to get. Make the 5212A virtually impossible to get. Drive the secondary price of a small group of watches up significantly so that more hot watches are perceived. Give the new breed of collector something hot that is not a Nautilus. Wouldn’t it be interesting to see the Ref. 5212A or the 5172G sitting on Frank Lampard’s wrist rather than a Nautilus? Especially so if these two watches became impossible to buy.
Watches like the Ref. 5212A are actually very special, but not yet appreciated enough amidst the Nautilus craze
End production on a number of watches
I cannot remember a time when the overall range of watches within Patek Philippe was so broad. In one sense, it has attracted a much broader audience. However, the flipside to this is that a lot of watches now sit unappreciated and unsold in the shop windows of Authorised Dealers. This sends a very bad message. Perhaps, Patek Philippe need to be more ruthless in ending production of some of the older references?
Make fewer complications within the Aquanaut/Nautilus range
As much as I like the Nautilus 5740G, I think it is a shame that a complication like a perpetual calendar is in a Nautilus. If Patek Philippe want to sell more perpetual calendars, then restrict the complication. The Aquanaut already has a travel time and chronograph complication. Indeed, if people want a chronograph or a perpetual calendar or a travel time watch, they can satiate their appetites within the Aquanaut/Nautilus range.
As beautiful as it is, maybe it makes sense to limit complications within Nautilus and Aquanaut
To my mind, the breadth of complications within the Nautilus/Aquanaut range need to be pared down, not increased. As it is, the Nautilus range covers almost all of the popular complications. Pare that down so that it becomes more simplified. At a minimum, do not expand complications within the Aquanaut range.
Emulate the Rolex template
Across the entire Rolex brand, there are a multitude of “hot” watches ranging from Daytonas to Submariners and GMTs. Rolex has managed to create a demand hype across a broad section of its collection. Patek Philippe need to look at how this has been achieved.
Why is the Nautilus SO hot?